Compañías Asociadas Petroleras S.A.

in implementation

Compañías Asociadas Petroleras S.A. (CAPSA) was established in 1977 and is engaged in the exploration, exploitation, development, and production of oil and gas it obtains from its own oil fields located in the Comodoro Rivadavia region, close to San Jorge bay in Chubut. CAPSA produces 10,500 bbl/day and has broad experience in developing mature oil fields. Its first acquisition was the Diadema field. This field represents 90% of CAPSA’s reserves and production. CAPSA now operates 7 oil fields and has 65.7 million barrels of proven reserves.Currently, 80% of daily petroleum production comes from wells using secondary recovery techniques. Encouraging results from these projects led the company to continue investing in this line. CAPSA has demonstrated capability and knowledge in the use of secondary recovery techniques. In September 2007, CAPSA began a pilot polymer injection project in 5 injection wells and a response was obtained in 16 productive wells. Good results from this pilot assisted recovery project encourages CAPSA to continue the expansion of this project.CAPSA’s investment plan provides for the following components: (a) expansion of the pilot assisted recovery project by increasing the polymer injection wells from 5 to 10 and drilling 10 new intermediate wells (in fill wells) to be located within the project area, for a total cost of US$35.4 million, and (b) drilling of 20 advanced/step-out wells where proven reserves are found, for a cost of US$19.1 million. In addition, and in order to have more funds available for executing the investment plan, CAPSA will refinance a loan granted by Deutsche Bank for US$17.5 million, coming due between 2010 and 2011.To develop part of its investment plan, CAPSA has sought financing from the IIC for US$8 million.